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Market Review: January 22nd, 2024

Two Hindenburg Omens on the Nasdaq so far in 2024 and possibly another one today. The Hindenburg Omen is triggered when there are large number of simultaneous highs and lows on the same index. Which indicates that part of the index is doing well while many stocks are tanking. This morning in the market review I wrote that investors were foolish to ignore the lagging small cap sector with the S&P 500 making new all time highs.

Today we learned that last week's new all time high in the S&P 500, Dow and Nasdaq 100 was accompanied by a weekly decline in new Nasdaq highs-lows:

In this chart we see that the average U.S. stock has made ZERO net progress over the past year while the primary indices have become ever-more concentrated on the Magnificent 7.

What it points to is the fact that investors have a severe case of survivor bias. They focus solely on the stocks and indices making new highs, while ignoring the declines everywhere else. Today Bitcoin is now rolling over hard below the 50 dma and a long way from the recent highs hit during the Bitcoin ETF launch two weeks ago (not shown).

Here we see Blockchain stocks - the leading sector of 2023 - are now down -40%.

Today's Statistics:

A-D breadth today was strongly positive on both the NYSE and the Nasdaq.

However, here we see that Nasdaq highs and lows are both elevated at the same time and > 100. Conditions that could trigger a third Hindenburg Omen.

NYSE highs/lows: 327/55

Nasdaq highs/lows: 159/107

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